An Offer Too Good to Refuse?
In July 2011, software veterans Todd Silverstein, Eli Tucker, and Jeff Cutler-Stamm launched Vizify, a company designed to help job seekers create online resumés that gave potential employers a sense of their off-resumé lives. After participating in the TechStars accelerator program, the trio morphed Vizify into a free service that aggregates tweets, photos, and career history from a person's social-media accounts and arranges them in a nifty, infographic-like personal webpage. The finished product went live in July 2012, backed with $1.4 million in funding from more than 30 angel investors.
Last fall, Vizify's seven-person staff, based in Portland, Oregon, was busy working on a series of new features that added more data feeds from services such as Flickr and Google+ and allowed people to customize their bios with quirky details to add more personality. The team was also on track to turn those users into paying customers.
In mid-October, however, Silverstein received an email from Twitter asking if Vizify would be willing to help with a project called the Year on Twitter, which highlighted the top tweets and hash tags of 2012. Because Vizify had already been gathering data on the topics its users most frequently tweeted about, Twitter executives thought the start-up would be a great fit for the project, says Rachael Horwitz, a Twitter spokeswoman.
Although Vizify wouldn't be paid for its work, the offer was still enticing. After all, the project would give Vizify a stamp of approval from the Internet giant and the chance to be seen by 140 million Twitter users--who could become new Vizify users.
But it was also a big risk. Vizify had no paying customers and was surviving on what was left from the $1.4 million from investors, who had been promised that Vizify would hit key milestones in the coming months. The company was set to build a series of add-ons and upgrades that would let users share even more biographical content. The goal was to boost activity among users to the point at which they would be willing to pay for the service. Partnering with Twitter would put those projects on the back burner.
A deal would mean building software for Twitter and spending upward of $30,000 on servers and extra freelancers to help prepare Vizify's website for what could be an onslaught of traffic--perhaps 10 times its biggest volume yet. And the work would have to be done fast, in just seven weeks.
Further, if Vizify's website crashed, it would hurt the company's reputation and turn off would-be users. At that point, Silverstein would have only enough cash to survive another five or six months and would be in a difficult position to get more money from investors.
Silverstein had even more misgivings after learning that Twitter's 2011 year-end campaign produced meager traffic--a little more than 1,400 tweets in total. Twitter promised it would put more firepower behind its PR efforts in 2012, but there was no guarantee. "We had no way of knowing," says Silverstein. "We fretted that we could possibly be relegated to a tiny text link on the bottom of the website."
For four days, Silverstein engaged in heated and emotional debates with his partners and investors over which way to go. More-conservative investors argued that the company was too young and not ready. They thought Silverstein should stay the course and deliver key objectives by summertime. "I learned from past investments and start-ups that going from zero to 100 could be a disastrous opening night," says Jordan Weisman, one of the company's investors.
Other investors argued this deal could offer credibility in the marketplace and lead to more partnerships or even buyout offers from big tech companies. "It's like getting knighted," says Jonathan Sposato, Vizify's lead investor. "It's a major brand saying, 'We trust these guys.'"
Ultimately, Silverstein and his team decided to work on the Twitter project. The co-founders wanted to do something big with their company, and this was their shot.
"It was a bet-the-company decision," says Silverstein. "We said, 'If this doesn't work, we are pretty hosed.'"
Two weeks before the December 12 launch, Vizify's website failed a stress test that simulated 100 sign-ups per minute. The company expected it would need to hold up to at least five times that volume.To get the site up to speed, Vizify's employees worked virtually around the clock. Many of them wound up sick. "I remember not sleeping for 60 hours at one point," says Silverstein. "It was a brutal time for us."
Ultimately, the promotion went off smoothly; 5,000 people signed up in the first 10 minutes, and Vizify's site held up fine. Twitter executives were happy, and some big names, including Paul McCartney and William Shatner, used Vizify.
It is still hard to say if the partnership was worthwhile. Vizify's participation in the campaign got just a few mentions in the press, and only about 10 percent of the roughly one million visitors from Twitter became active Vizify users. Still, the boost was enough to double Vizify's user numbers to 200,000, and by early February, Vizify had signed partnerships with two other large tech companies. (Silverstein couldn't reveal which companies because of a nondisclosure agreement.)
"There's always the weight of, 'Have I made the right decision or not?'" says Silverstein. "We are still a start-up that is fighting for its life and its legitimacy, so we have a lot of work to do."
The Experts Say...
It's worth the risk
As a CEO, you get lots of conflicting advice from your investors, but I think Silverstein made the right decision. Despite not having sufficient operating runway, Vizify made the most out of a less than ideal situation. Silverstein took the chance and did the deal with Twitter, even if it meant burning through his cash faster. It was a risky move but the right thing to do, given the potential upside and market validation that Twitter could bring. It looks like it worked out well enough in his favor.
CEO of LaGrange Systems and TechStars mentor
Be willing to walk away
In general, I'd strongly recommend against betting the company on a single partnership opportunity. Relationships with large companies can often leave a start-up vulnerable to just about anything: your champion leaving the company, the boss not liking your product, or budgets and priorities changing. Working with a big, prestigious brand will often appear as a make-or-break opportunity, but sometimes it takes real courage to walk away.
Managing Director at FirstMark Capital
Stand up for your team
As a founder, the most valuable thing you have is the time of your team, and so the hardest decisions come when there would clearly be a benefit to a partnership, but it would also take the core team away from building key features of the product. That said, I think Vizify's CEO made the right call, because it didn't require too much unique customization and allowed them to showcase their core value proposition.
--Jade Van Doren
CEO of TechForward